This Boss’s Day, Reward Your Managers With the Training They Need

Today is Boss’s Day in the U.S.! Is your company doing anything to celebrate your managers? We have a suggestion: Offer them training they’ll appreciate and that the whole organization will benefit from. That’s right — we’re talking about training on communicating pay.

October 16, 2017

We learned in our 2017 Compensation Best Practices Report (CBPR) that fewer than one in five organizations (19 percent) say they are “very confident” in their managers’ abilities to have tough conversations about compensation with employees. And yet! Only 30 percent of companies reported they offer training to managers to help them talk pay. It’s fair to be critical, but let’s throw the bosses a bone here, what do you say?

Why Getting Compensation Communication Right Matters

How an employer talks to employees about pay is directly linked to how engaged those employees say they are. Think about that: The way you communicate compensation — not just how much you pay, but what you say about it — has a significant impact on engagement, the ultimate employee-success metric.

The Link Between Talking Pay and Employee Engagement

In a PayScale study of 71,000 employees, we found that clear and honest communication around pay was a top predictor of employee sentiment (which includes things like “satisfaction and “intent to leave”). It had even more impact than the factors you’d typically expect to bump up engagement levels, like career advancement opportunities, employer appreciation and enthusiasm for the future of the company.

An employee’s compensation package comes with a lot of implications, one of them being how valued (or not) he or she is to the employer. And the way an employee feels about his or her compensation determines their level of engagement.

How do you influence how employees feel about their compensation, and in turn, impact engagement? Get the comp-talk right.

Most People Don’t Know Whether They’re Paid Fairly

Our study showed that absent the data, people are often wrong about how their pay compares to what “the market” is paying. Most strikingly, two-thirds of people who are paid at market actually believe they’re underpaid. That’s a lot of people who feel undervalued, and it’s easily avoidable.

Another big reveal of the study was that an employee’s perception of his or her pay is a strong indicator of intent to leave the company — as favorability of pay goes down, intent to leave goes up. Sixty percent of respondents who believed they’re underpaid said they planned to leave, as compared to only 39 percent who believe they’re overpaid. The takeaway is clear: If your employees are paid fairly (or more), make sure they know it.

Good Communication Mitigates Not-So-Good Compensation

But what if they aren’t? What if what your pay is below market? No need to panic; consider this additional finding from the survey: Open communication about compensation can actually make up for low pay. Eighty-two percent of surveyed employees said they were still satisfied with their work even at below-market pay, so long as the logic for the pay rate was communicated. On the flip side, overpaying talent in an effort to retain them — without having the compensation conversation — does not pan out. The study showed it is more effective to pay at market rate and discuss the hows and whys of that rate than it is to overpay but stay mum. Communication really is the key.

Add (Comprehensive) Comp-Communication Training to the Mix

Companies offer training on all kinds of topics these days, and to be fair, that includes communication topics.

Unfortunately, they rarely tackle the more in-depth compensation subjects that would arm managers with the knowledge and tools they need to navigate pay conversations successfully.

Make today the day! Train your managers in communicating compensation. Here are some great resources to get you started: